Correlation Between Altisource Asset and Carbon Streaming

Can any of the company-specific risk be diversified away by investing in both Altisource Asset and Carbon Streaming at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Altisource Asset and Carbon Streaming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altisource Asset Management and Carbon Streaming Corp, you can compare the effects of market volatilities on Altisource Asset and Carbon Streaming and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Altisource Asset with a short position of Carbon Streaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altisource Asset and Carbon Streaming.

Diversification Opportunities for Altisource Asset and Carbon Streaming

-0.51

Correlation Coefficient

Altisource Asset  Carbon Streaming

Excellent diversification

The 3 months correlation between Altisource and Carbon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Altisource Asset Management and Carbon Streaming Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Streaming Corp and Altisource Asset is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Altisource Asset Management are associated (or correlated) with Carbon Streaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Streaming Corp has no effect on the direction of Altisource Asset i.e., Altisource Asset and Carbon Streaming go up and down completely randomly.

Pair Corralation between Altisource Asset and Carbon Streaming

Given the investment horizon of 90 days Altisource Asset Management is expected to under-perform the Carbon Streaming. In addition to that, Altisource Asset is 2.64 times more volatile than Carbon Streaming Corp. It trades about -0.09 of its total potential returns per unit of risk. Carbon Streaming Corp is currently generating about -0.05 per unit of volatility. If you would invest  65.00  in Carbon Streaming Corp on October 22, 2024 and sell it today you would lose (25.00) from holding Carbon Streaming Corp or give up 38.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.0%
Values	Daily Returns

Altisource Asset Management  vs.  Carbon Streaming Corp

Altisource Asset Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altisource Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Altisource Asset is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Carbon Streaming Corp

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Streaming Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carbon Streaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altisource Asset and Carbon Streaming

The main advantage of trading using opposite Altisource Asset and Carbon Streaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altisource Asset position performs unexpectedly, Carbon Streaming can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carbon Streaming will offset losses from the drop in Carbon Streaming's long position.

The idea behind Altisource Asset Management and Carbon Streaming Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.